I'm an associate editor at Forbes, part of the team responsible for our signature issues: The Forbes 400, Global Billionaires and America's Richest Families. As a writer, I cover these wealthy business builders as well as other entrepreneurs. Before Forbes, I also reported on entrepreneurs for Inc. magazine, and attended Syracuse University's S.I. Newhouse School of Public Communications.

How A Hedge Fund Made $63 Million In Two Weeks Off Barnes & Noble

Barry Rosenstein walked into Barnes & Noble a few weeks ago, and has now seen his investment return 93%. (Image credit: Getty Images North America via @daylife)

* Updated To Reflect Market Close Share Price

There are plenty of winners from today’s surge in Barnes & Noble stock. Shares ended the day up 52% after Microsoft said it would invest $300 million in the bookseller’s e-reader division.

CEO Leonard Riggio, the company’s largest shareholder, has likely come away smiling from the deal. Ditto for billionaire activist investor Ron Burkle. Those two men control 29.5% and 19.7% of the company, respectively.

But you have to imagine the largest smile is likely on the face of Barry Rosenstein. The activist investor’s hedge fund, Jana Partners, took a 12% stake in Barnes & Noble just a few weeks ago, on April 11. On that day, Barnes & Noble stock closed at $11.73, making the 6.96 million shares worth $81.6 million.

Now, with the share price at $20.75, Jana’s stake is worth $144.4 million. That’s a windfall of $62.8 million, or a 77% return. Not bad for a few weeks.

“The question is: Why was any body short that stock?” Rosenstein said on CNBC this morning. “We got the Nook business for nothing.”

Rosenstein expected the bet to pay off since Barnes & Noble’s Nook division was attracting a lot of attention. The deal between Microsoft and Barnes & Noble props up the Nook division, by far the bookseller’s fastest-growing and costliest business. The high expenses that went into fueling the Nook’s growth—and jostling for position next to Apple‘s iPad and Amazon.com‘s Kindle tablets—has weighed on Barnes & Noble’s profits, prompting a strategic review of the division and Microsoft’s investment. “It played out exactly as we hoped,” Rosenstein said.

Rosenstein is looking to stay long. “I think there’s more value to this stock,” he said. He believes the market hasn’t full priced in the Nook’s potential growth or the value of Barnes & Noble’s retail stores.

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